Accordingly, the issue is not will beef prices be higher but how much higher, and the answer will be dependent on consumer demand for beef, he reported in a recent "Cow/Calf Corner" newsletter.

Consumer demand for beef is a combination of a consumer's "willingness" and "ability" to buy a given quantity of beef at a given price, Peel said, noting that this would be true for demand for nearly any product. Often, consumers will be open to paying higher prices for a product that's available in lower quantities but won't purchase more of that product until it's available in more quantity, he said.

Among the "willingness" factors is the underlying desire or preference for beef, and there are no significant indications that consumer desire for beef has declined, Peel said. However, consumers may have reduced their desire for certain kinds of beef products such as more expensive steaks and increased their preference for more affordable ground beef, he said.

Another important willingness factor is value, i.e., the combination of preference for beef and its price relative to substitute products such as chicken and pork, he said. As beef and pork prices have been rising nearly in tandem, consumers have seen beef as a value next to pork, he said, and as chicken production is decreasing and chicken prices are rising, consumers should also see beef as a value next to chicken.

Among the "ability" factors are economic measures such as being employed, being employed at good-paying jobs, personal disposable income and personal savings, Peel said. Anecdotal evidence -- large winter crowds at Disney World and other entertainment venues and strong holiday spending -- indicates that consumers are more able to pay and are moving past recession-induced retrenchment to more typical spending, he said.

Accordingly, beef demand should be sufficiently strong in 2012 to support higher beef prices and, in turn, higher cattle and feeder prices, Peel said.